In the bowl of a mixer, beat the butter on medium speed until creamy. Reduce speed to lowest setting and gently add the confectioners’ sugar and baking powder. Continue mixing until everything is incorporated.
Add the flour, one cup at a time, and then the egg yolks, one at a time; continue beating for a minute. Pour in the water and continue mixing until the dough is smooth and can form a ball. Wrap the dough in plastic wrap and place it in the refrigerator. Let it cool until it hardens enough to be manageable, at least 1/2 hour (can refrigerate up to a couple of days).
When ready to bake, preheat the oven to 375 degrees and cover a baking sheet with parchment paper.
Place half the dough on a piece of lightly floured parchment paper, sprinkle some flour over it and then place another piece of parchment paper on top. Use a rolling pin to gently roll out the dough, to about 1/4-inch thick. Remove the top piece of parchment paper and cut out circles with a round, 3-inch cookie cutter. With a smaller cookie cutter, make a circular indention in the middle of each cookie, without cutting all the way through the dough (there should be about a 1/4-inch space between the indentation and the edge). Press the edges of each cookie with a fork, as if marking the edges of a pie. Repeat the process with the remaining dough and roll it out again, making as many cookies as possible.
Space the cookies at least 1/4-inch apart on a cookie sheet and bake for about 10 minutes, until they are fully cooked and the bottoms are lightly browned. Remove from the oven and let cool; repeat with the remaining cookies.