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.