A Generalized AutoRegressive Conditionally Heteroscedastic model contains an equation for changing variance. GARCH models are primarily used in the assessment of uncertainty. A GARCH equation of order (p, q) assumes that the local variance of the error terms at time t is linearly dependent on the squares of the last p values of the error terms and the last p values of the local variances. When q is zero, the model reduces to an ARCH model.