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An improved iterative algorithm is first proposed to calculate the rate-distortion performance of causal video coding for any continuous sources. Instead of using continuous reproduction alphabets, it utilizes finite reproduction alphabets and iteratively updates them along with transitional probabilities from the continuous source to reproduction letters, thus overcoming the computation complexity problem encountered when applying the algorithm recently proposed by Yang et al for discrete sources to continuous sources. The proposed algorithm converges in the sense that the rate-distortion cost is monotonically decreasing until a stationary point is reached. It is then applied to practical video data to establish some theoretic coding performance benchmark. In comparison with H.264, experiments show that under the same motion compensation setting, causal video coding offers a roughly 1 dB coding gain on average over H.264 for the IPPIPP...GOP structure. This suggests that an area one could explore to further improve the rate-distortion performance of H.264 be how quantization and coding should be performed conditionally given previous frames and coded frames and given motion compensation.