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A video interpolation algorithm for spatio-temporal video pyramid coding is presented. The temporal and the spatial predictions of the present frame are interactively combined to produce the best prediction of the present frame. For this purpose, the temporal prediction error variance and the lower resolution image variance are measured and compared for each region. The proposed region-based video interpolator is shown to give visually correct predicted images by minimizing the spatial and the temporal prediction artifacts such as abasing, uncovered background and blocking effect. Promising results are obtained for lossy compression.

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